MNK is a large public company that employs numerous accounts receivable clerks. Their jobs involve processing invoices and keeping the accounting records updated. Which of the following is the most likely cost driver for the accounts receivable activity cost pool?
A) Number of journal entries
B) Number of product lines produced by MNK
C) Number of invoices
D) Average dollar amount for each credit sale

Question

Quizplus · Accepted Answer

The number of invoices processed is the most likely cost driver for the accounts receivable activity cost pool, as the activity of processing invoices is directly proportional to the number of invoices processed. The other options, such as number of journal entries or average dollar amount for each credit sale, may not have a direct correlation to the amount of work done by accounts receivable clerks. Number of product lines produced by MNK is also not directly related to accounts receivable activity.

MNK Is a Large Public Company That Employs Numerous Accounts